Total announced the purchase of a 25% stake in NOVATEK in September 2004. The French company intended to invest up to $1 billion into the Russian company and was expected to become a NOVATEK shareholder in late 2004.
NOVATEK, which produces nearly 22 billion cubic meters of natural gas a year, does not have substantial market positions. In comparison, Gazprom produces more than 540 billion cubic meters a year. Nonetheless, the Federal Anti-Trust Service has delayed the examination of this issue.
Igor Artemyev, the head of the service, explained that NOVATEK had to complete its own reorganization program before the company could sell its shares to Total.
However, some experts think that the anti-trust agency is afraid of giving foreigners permission to operate on the domestic market without the top Russian leadership's permission.
Total seems to have reached a similar conclusion. Paris has therefore decided to enlist the Russian leadership's support. President Chirac has sent a letter to his Russian counterpart asking him to accelerate the deal.
Experts believe the Total-NOVATEK deal has now moved from the economic to the political realm, as now the decision rests with the Russian leader. Mr. Putin, who maintains friendly relations with Chirac, will most likely meet Paris halfway. However, he may ask the French president to reciprocate by supporting Russia in its efforts to join the World Trade Organization (WTO). Moreover, Dmitry Orlov, the general director of the Political and Economic Communications Agency, believes Mr. Chirac could promise Mr. Putin that French officials will not hinder Russian corporate operations on the French market.